Latest news with #OTRI
Yahoo
2 days ago
- Business
- Yahoo
Economic uncertainty delays truckload market breakout
Chart of the Week: Outbound Tender Reject Index, National Truckload Index (linehaul only) – USA SONAR: The truckload market remains poised for a breakout, but the timeline appears to be extending. Analyzing the trend line of tender rejections (OTRI) and spot rates excluding fuel (NTIL) over the past two years reveals a clear upward trajectory with increasing volatility. However, this trend flattened in the first five months of the year, as economic uncertainty continues to dampen demand. The trucking sector is enduring one of its longest and most challenging economic stretches since deregulation. Truckload demand is currently down approximately 30% from its COVID-era peaks. While those peak levels were never sustainable, they lasted long enough to inflate capacity far beyond what the market required. From June 2020 to October 2022, the number of active truckload operating authorities grew by roughly 48%. Since then, they have declined by only about 12%. Federal Motor Carrier Safety Administration data is slow to reflect these changes, as it can take up to two years to clear inactive authorities unless operators self-report their exit. Carrier Details helps refine this timeline to around a year, but it still lags. Importantly, one authority can represent a single truck or a fleet of a thousand, so this metric isn't evenly distributed. Tender rejections serve as a reliable proxy for market balance. Carriers are unlikely to reject freight in soft markets unless they have alternatives, so rising rejection rates indicate tightening capacity and strained networks. Capacity has been in correction mode for years and seemed close to reaching equilibrium late last year. Over the holidays, the OTRI exceeded 10% for the first time since 2021. This occurred even as shippers increasingly turned to intermodal for longer hauls, taking advantage of early inventory pull-forwards that gave them more flexibility in shipping. The ongoing trade war has further fueled the inventory pull-forward phenomenon. After briefly cooling in late April and early May, tariff activity resumed, sending mixed signals and triggering repeated shifts in shipping behavior. Import bookings data shows a surge in container volumes bound for the U.S. last summer, followed by erratic swings. Container imports can be a useful demand proxy, but they often give false signals during periods of uncertainty — something that has plagued shippers since COVID. Import demand remains relatively high, but much of the freight is precautionary. With trade policy and consumer spending still in question, a significant portion of freight is sitting idle in warehouses rather than moving on trucks. The economy seems to be stalling, if not slowing outright, as business investment weakens. This protracted trade policy uncertainty is unprecedented, leaving businesses without a playbook. Hiring has slowed, and layoffs are rising. Initial jobless claims have increased since January after declining through the latter half of 2024. While aggregate figures remain historically healthy, the trend is concerning. If the labor market continues to deteriorate, consumer spending could contract further. Combined with persistent inflation and reduced investment, these factors suggest a stagnating economy. The fact that rejection rates have stayed above 6% since International Roadcheck in mid-May — despite underwhelming demand — should be seen as a positive signal for carriers and 3PLs. Demand conditions are actually weaker than in mid-2023, when excess inventory caused order slowdowns and pushed OTRI below 3%. This suggests a meaningful amount of capacity has exited the market, with more likely to follow as demand remains soft. While the outlook isn't bright for all stakeholders, it does indicate that the imbalance between truck supply and freight demand has narrowed. Shippers should take note: The market is primed for a sharp reaction if macroeconomic conditions improve. Even if they don't, transportation is likely to become more challenging going forward, even if not dramatically so. The FreightWaves Chart of the Week is a chart selection from SONAR that provides an interesting data point to describe the state of the freight markets. A chart is chosen from thousands of potential charts on SONAR to help participants visualize the freight market in real time. Each week a Market Expert will post a chart, along with commentary, live on the front page. After that, the Chart of the Week will be archived on for future reference. SONAR aggregates data from hundreds of sources, presenting the data in charts and maps and providing commentary on what freight market experts want to know about the industry in real time. The FreightWaves data science and product teams are releasing new datasets each week and enhancing the client experience. To request a SONAR demo, click here. The post Economic uncertainty delays truckload market breakout appeared first on FreightWaves. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
27-05-2025
- Business
- Yahoo
Tender Rejections: The Freight Market's Crystal Ball
What's a tender rejection rate? Few indicators are as telling in the dance of freight logistics as the tender rejection rate. This metric, often underappreciated outside logistics circles, offers a window into the balance of supply and demand, signaling shifts in market dynamics before they fully materialize. Tender rejections occur when carriers decline loads offered under contract by shippers. A rising rejection rate typically indicates tightening capacity, as carriers opt for more lucrative spot market opportunities. Conversely, a declining rate suggests ample capacity and potentially softer spot rates. Current Trends As of May 2025, the national Outbound Tender Rejection Index (OTRI) stands at 6.69%, reflecting a slight increase from previous weeks. This uptick suggests a modest tightening in capacity, though rates remain relatively there are disparities. The Southeast has seen rejection rates surpass 10% for the first time since 2022, indicating a significant tightening in that area. In contrast, the West Coast, particularly Southern California, continues to experience low rejection rates, reflecting abundant capacity. Implications for Fleets Understanding tender rejection trends is strategic planning. In regions with rising rejection rates, carriers may find opportunities to negotiate higher rates or prioritize spot market loads. Conversely, maintaining strong relationships with shippers and focusing on efficiency becomes paramount in areas with declining rates. While current trends suggest a gradual tightening in certain regions, the overall market remains balanced. Carriers and owner-operators should monitor rejection rates as they offer early signals of market shifts. This helps make proactive adjustments to operations and rejection rates are an indicator of the freight market's health. By staying attuned to these metrics, carriers and owner-operators can make better decisions, understanding the industry's complexities and how they will affect the near- and long-term future of trucking. The post Tender Rejections: The Freight Market's Crystal Ball appeared first on FreightWaves. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
19-05-2025
- Automotive
- Yahoo
Roadcheck effects persist as truckload market still tightening
The Commercial Vehicle Safety Alliance's (CVSA) annual International Roadcheck inspection blitz has come and gone, but its effects on the trucking industry are proving more persistent than in recent years, revealing a market that may be more vulnerable to disruption than previously thought. The three-day enforcement initiative, which took place last Tuesday through Thursday, saw inspectors across North America conducting comprehensive examinations of both driver credentials and vehicle conditions. While Roadcheck week traditionally causes temporary market tightening as drivers opt to sideline their trucks, this year's aftermath suggests deeper structural issues in the freight market. During the inspection period itself, truckload capacity tightened noticeably, with the Outbound Tender Rejection Index (OTRI) increasing by over half a percentage point in just a few days. National tender rejection rates jumped from 5.21% on May 11 to 6.48% by Sunday. Simultaneously, the National Truckload Index (NTI), which tracks aggregated dry van spot rates, rose approximately 4.5% – from $2.19 a mile to $2.29 a mile – over the same period. What makes this year's Roadcheck response particularly notable is that these elevated rejection rates have persisted beyond the inspection period itself. The sustained tightening indicates this is potentially the most vulnerable the truckload market has been in years, despite broader economic historical context highlights just how unusual this year's reaction has been. In 2021, Roadcheck had minimal market impact as spot rates were already climbing 1%-2% weekly, creating strong financial incentives for drivers to remain operational despite inspection risks. The 2022 event was similarly muted, despite a collapsing demand environment, due to the sheer volume of carriers still on the road during that transitional market phase. Last year marked a more significant response to Roadcheck than previous years, though still relatively marginal and complicated by the Memorial Day holiday. This year's more dramatic and sustained market reaction suggests a fundamental shift in the balance between supply and demand. The current market conditions help explain this heightened sensitivity. Spot rates had declined by 8% over the previous three months, reflecting broader stagnation across the economy and freight sector. In this challenging environment, many carriers are operating with minimal financial cushion, simply trying to cover basic operational costs. A key insight from the SONAR data is that the surge in rejections wasn't driven by increased demand. The National Outbound Tender Volume Index (OTVI) showed stable tender volumes from shippers to carriers throughout the period, confirming that the tightening stemmed exclusively from the supply side of the year also introduced a variable that likely contributed to the market dynamics: the enforcement of an existing rule requiring drivers to speak and read English. While it's unclear if this was a focal point in this year's inspections, it potentially contributed to an increased number of drivers choosing not to operate, further constraining available capacity. For freight brokers and carriers, the lingering effects of Roadcheck could signal challenging conditions ahead. If this summer follows typical seasonal patterns, shippers will likely have an increasingly difficult time securing capacity, especially considering that current rejection rates are already approaching last year's summer peak levels. In 2023, rejections climbed from Roadcheck levels to 6.59% by early July, ahead of the Independence Day holiday. Looking ahead, while Roadcheck week alone won't fundamentally alter the difficult conditions facing the industry, its magnified impact this year serves as an important indicator of underlying market fragility. Additional potential disruptions loom on the horizon, including a recent surge in import bookings following the Trump administration's softening stance on tariffs with China. This could trigger a wave of inbound freight and contribute to a summer uptick in demand. The transportation industry may be approaching the catalyst it has been anticipating. While the immediate effects of Roadcheck will fade, the combination of evolving trade conditions, potentially low inventory levels and the demonstrated sensitivity to capacity disruptions suggests the market may be at an inflection point. The post Roadcheck effects persist as truckload market still tightening appeared first on FreightWaves.
Yahoo
02-05-2025
- Business
- Yahoo
What the Latest Rate Dip Means for Small Carriers Part 2
It is May 2025, and if you have been paying any attention to your settlements over the last 30 days, you already know what we are about to talk about today. We are officially staring down another rate dip, one that is not just uncomfortable but potentially damaging if you are still operating without a plan. Spot rates have slid once again, tender rejections are falling like a rock, and the combination of softer volumes and rising global tariffs is stacking headwinds against small carriers. This is not the time for theories. This is the time for facts, strategy, and action. Because what we are seeing right now is not just a market cycle. It is a separation you need to be on the right side of it. Take a hard look at the SONAR charts. The National Truckload Index (NTI) is sitting at $2.20 per mile today. That is a continuous three-month slide from $2.29 in March and $2.25 in April. This is not an isolated blip. This is a trend. Van Spot Rate Per Mile has dropped nine cents in just 60 days. Van Contract Rate Per Mile is hovering at $2.27, near its 52-week low. Outbound Tender Rejection Index (OTRI) is down to 4.95%, a clear sign that carriers are accepting nearly every contracted load offered, with no pricing leverage. Outbound Tender Volume Index (OTVI) remains soft, barely above 10,000 tendered loads nationally, showing no meaningful surge in demand even during typical spring shipping seasons. Translation for small carriers:The freight is out there—but not enough to support aggressive rate are ultimately taking what you can get in this market. As if the market dynamics were not enough, May also brings another pressure point—tariffs. The U.S. government recently expanded tariffs on multiple Chinese goods, including electric vehicles, solar components, and critical manufacturing inputs. The ripples from those decisions are starting to flow into the supply chain, and they are not helping freight volumes. What does that mean for you? Certain sectors like retail and consumer goods could tighten inventory orders Import-heavy markets like Los Angeles and Savannah might see softer inbound flows Pricing pressure will continue downstream, making cost control even more critical You are now playing in a freight market that is being squeezed from both sides—demand softness and cost inflation. That is why you have to move differently now. If you are a one-truck operator or a boutique fleet under ten trucks, here is the brutal truth. You cannot bank on rates improving anytime cannot depend on load boards to save cannot operate on emotion. As The 12 Week Year reminds us: 'Success is not based on intention. It is based on execution.' And execution in this market looks like controlling the controllables. Your break-even cost per mile is no longer just a nice number to know. It is your survival number. If you do not know exactly: Your fuel cost per mile Your maintenance cost per mile Your insurance cost per mile Your fixed expenses per week You are driving blind. This rate environment does not reward hustle. It rewards precision. Every penny saved on maintenance, every idle hour you eliminate, every tire you properly inflate—that is how you build margin in a $2.20 RPM world. Look at the spot rate map above. The pockets of rate strength are not national—they are regional. The Southeast and parts of Texas are showing some Midwest remains volatile but opportunistic if you play it West Coast? Soft, unless you are landing high-value produce or air freight. Chasing miles from coast to coast will bleed your profits dry. In this market, smart carriers shorten their lanes, tighten their operating radius, and build density around 1-2 core lanes. You need to operate like a sniper, not a shotgun. If you are still waiting for brokers to call you with good freight, you are already behind. The carriers who will survive this stretch are the ones proactively building direct shipper relationships now, not six months from now. That means: Picking up the phone every week Sending follow-up emails Building small lanes with local manufacturers and distributors Showing up professional, consistent, and reliable It is not glamorous. It is not quick. But it is how you get off the hamster wheel of the spot market. Remember from The 12 Week Year: 'Action is the bridge between where you are and where you want to be.' Shipper outreach is not optional anymore. It is necessary. If you are feeling the squeeze, you are not feeling it is not an excuse to freeze. Here are a few things every small carrier should be doing immediately: Review every controllable expense on your books Audit your route density and regional exposure Make five direct shipper outreach attempts per week minimum Double down on preventive maintenance to avoid breakdown premiums Track idle time, speed, and MPG weekly using your ELD data Reset your revenue goals based on realistic RPM assumptions (between $2.10–$2.30, not $2.70 dreams) The carriers who keep moving, who keep adjusting, and who keep executing daily rhythms will not just survive this rate dip—they will be the ones standing tall when the rebound comes. You cannot fake your way through this market. Every corner cut, every lazy load booked, every late delivery—those cracks are getting exposed faster than ever. And if you are serious about being here 12 months from now, you need to be serious about playing the long game starting today. Inside the Playbook Masterclass, we are not teaching are teaching that work whether the rate is $2.70 or $ that give you power when the rest of the market is losing control. Because just like The 12 Week Year says: 'When you choose execution, you choose freedom.' The question is—what are you choosing today? Because the clock is ticking, and the market is not waiting for anyone. The post What the Latest Rate Dip Means for Small Carriers Part 2 appeared first on FreightWaves. Sign in to access your portfolio
Yahoo
17-04-2025
- Business
- Yahoo
Five takeaways from the State of Freight: a market at the precipice
Just a few weeks after the March State of Freight webinar, FreightWaves and SONAR CEO Craig Fuller and SONAR Chief of Market Intelligence Zach Strickland took to the same platform with a significantly altered freight market landscape in front of them. In March, what was on the table were auto tariffs, now paused. But what happened in the relatively short interim was Liberation Day, and the escalating tariff war with China that has put 145% tariffs on imports from that country, the largest supplier of imported goods to the U.S. Here are five key points of discussion from Fuller and Strickland. During the webinar, Strickland and Fuller turned to several data series in SONAR to show the state of the market as the era of tariffs takes hold. One was the Outbound Tender Volume Index (OTVI), one of the most important SONAR data series that measures changes in the direction of freight volume, which has showed a notable decline in recent weeks. The direction of the OTVI WAS backed up anecdotes relayed by Fuller. 'I was with a large transportation player this week, and they made the comment that a lot of their customers have asked for slower transit time,' Fuller said. Given that logistics is an industry where time normally is of the essence, the request to Fuller was funny because it meant that end customers were looking for a 'warehouse on wheels or on tracks.' 'It's because nobody wants to take possession of the inventory,' Fuller said. 'There is an advantage to a warehouse on wheels, because then you don't have to worry about it.' Maybe it's because of the warehouse on wheels effect, but indicators on the strength of the trucking market have not taken a significant downward move as a result of tariff uncertainty. The Outbound Tender Rejection Index, a measurement of truckload capacity, is about the same level as it was in February though it has slipped somewhat in recent weeks. The OTRI is running at about 5.6%, and that is higher than a year ago, when it was below 4%, indicating tighter capacity at present. That rejection rate, Fuller said, 'suggests that the market is still in a recovery process. What concerns me is what's coming.' 'It's not really dire,' he said, adding that an OTRI number at the current level might otherwise be seen as the end of the three-year freight recession. If the market were to turn down from its current levels, Fuller said, it would not just be a new phase of that three-year slump. Instead, he said, 'what we're looking at now is an entirely different cycle caused by this economic blow that potentially could be reverberating through the freight market as well as the broader economy.' Neither Strickland nor Fuller was optimistic about what lies ahead. One statistic they cited was SONAR's which is a 14-day moving average of import bookings of twenty foot equivalent units (TEUs). In recent weeks, the index has taken a notable downturn. Import activity was at a near-record level just a few weeks ago, Fuller said. 'But if you look at the day-to-day trade data, it is telling us that bookings are literally dropping off the shelf, and we're seeing bookings down 60% from where they were before,' he said. Where that is going to hit would be intermodal, since much of that cargo comes into major ports like Long Beach/Los Angeles and then moves into the rest of the country by rail, and trucking that goes cross country or long distances. 'That summer surge, where a lot of import activities take place, I don't know that we're going to see that this year,' Fuller said. 'I'd be surprised if we did.' In an ominous warning, Fuller said he expects drayage activity in California to begin collapsing in just a couple of weeks as a result of the downturn in import volume. Fuller said the 10% across-the-board tariffs implemented by the Trump administration were probably seen by most companies as a cost that they could deal with. Even when the discussion was about a 54% tariff from China, 'that felt like many businesses could absorb that cost.' But at 145%, 'we're talking about effectively cutting off most trade. It is just basically a message that the administration does not want to see trade with China.' Fuller spoke from the perspective of also owning several small e-commerce businesses that sell among other things model airplane products. But it was observations Fuller said he heard from a freight forwarder that were the most stark. 'The comment made to me was a lot of our customers are going to go bankrupt,' Fuller said. 'And the reason is that companies that have a single source supply chain in China did not have enough time to deal with the short-term pain. For them, they're just cancelling altogether.' He said in his own business, there are some products that at a 145% tariff, 'we're not going to make any money on. It is just easier to cut it all off.' And that cutoff will come with a wish: 'we'll hope that this gets resolved quickly,' Fuller said. But it's difficult to forecast, because as Fuller added, 'a lot of times the suppliers don't even know what's going on.' Fuller doesn't see the Chinese backing down anytime soon. He noted that in China, Mao Zedong, who Fuller noted led the country during a period when anywhere from 40 million to 60 million people died due to various Mao policies, is nonetheless a revered figure still. Xi Jinping, whom historians have said is the most powerful leader in China since Mao, 'wants to be the sort of second coming of Mao.' Given that, Fuller doesn't see China blinking anytime soon. 'How long are we going to stay in this situation where you have Donald Trump at a 145% tariff and China saying, we're going to take the pain?' Fuller said. 'The Chinese can suffer a lot longer than Americans.' The people of the U.S., according to Fuller, 'care more about commerce and business than we do about suffering the pain and sacrifice that is being asked of us.' Americans support a push to re-establish manufacturing in the U.S., he said, 'but for how long?' More articles by John Kingston Another federal circuit weighs broker liability, boosting odds of Supreme Court review Freight fraud everywhere, but Truckstop CEO asks: Is anybody going to jail? Breaking from the FreightTech AI pack: Companies make their case at TIA meeting The post Five takeaways from the State of Freight: a market at the precipice appeared first on FreightWaves. Sign in to access your portfolio
